President Energy Announces Unaudited Interim Results for H1 2021

Source: 9/30/2021, Location: Europe

President (PPC), the oil and gas upstream company with a diverse portfolio of production and exploration assets focused primarily in Latin America, announces its unaudited interim results for the six months ended 30 June 2021.

Corporate and Financial Summary

- Group turnover of US$17.1 million up 24.5% over the same period in 2020

- Free cash flow from core operations of US$6.2 million up 134% over the same period in 2020 (1H 2020 US$2.6 million) and approximately equal to the whole of 2020

- Adjusted EBITDA of US$4.5 million up 309% over the same period in 2020 and over 114% versus the full twelve months of 2020

- Third party financial borrowings US$5.8 million (1H 2020 US$3.7 million) with the balance being covenant lite, long-term debt from an affiliate of our largest shareholder

- Net profit after tax before non-cash items (comprising depletion, depreciation, amortisation, impairment, non-operating gains/losses and deferred tax) of US$2.1 million (1H 2020 US$1.8 million)

- Loss for the period of US$3.4 million (1H 2020 US$4.0 million) after non-cash DDA charge of US$5.1 million (1H 2020 US$5.2 million)

- Agreement signed with a substantial Northern Hemisphere state-owned energy company to farm in for a 50% participating interest in the Pirity Concession, Paraguay

- Atome Limited formed as a UK intermediate holding company focusing on the commercial production, sales and marketing of hydrogen and ammonia

Operational Summary

- Average Group net daily production in the period of 2,648 boepd down 2% on the previous year, impacted by a 34% decline in US production as explained below.

- Group production split 64% oil and 36% gas (1H 2020: 71% oil and 29% gas)

- New oil treatment plant in Puesto Flores constructed on time and within budget bringing estimated opex savings of some US$ 4 per barrel coming through in H2

- Well operating costs per boe decreased by 7% over same period last year

- Four new gas wells successfully drilled

- Positive results from secondary recovery pilot project in the main Puesto Flores field

- In Louisiana, both the Triche and Simmons 2 wells remain offline as they have for the last three months awaiting workover of the Triche well to reinstate production. The operation of the Triche well is required for the Simmons 2 well to operate, as the Simmons 2 well used the gas produced from the Triche for gas lift. The Triche well has not performed optimally all year due to the progressive breakdown of the downhole gravel pack used to constrain sand production. The frustrating delay in fixing the problem was materially exacerbated by the effects of Hurricane Ida which devastated the locality.

Current trading

- Management reports show average Argentina monthly revenue for the first two months of Q3 2021 ran at the rate of US$2.9 million, a 21% increase over the monthly average of US$2.4 million in H1

- Sales price for oil in Argentina improving and expected to show an 8% increase in H2 compared to H1

- Drilling services contract signed for three firm wells to be drilled at the Puesto Guardian Concession commencing in October, including an option to retain the rig into the New Year for further wells after drilling of the third firm well.

- Each new Puesto Guardian well is estimated to cost US$3.5 million and have a drilling time of 45 days with a mean success case initial projected oil production of 40 m3/d (250 bopd).

- In Louisiana, the Company is planning for the workover of the Triche well to be completed by the end of October and the wells will work at the levels enjoyed last year namely at 300 boepd net to President half being oil. Realisation prices there are robust with oil currently at approximately U$70 per barrel.

- President continues its focus on reducing costs with the objective of further reducing its operational expenses next year assisted by the savings from the new treatment plant in Puesto Flores

- On current trading, average production for H2 2021 in Argentina is estimated to be approximately 2,700 boepd

- Following prolongation of the Pirity as well as the Hernandarias exploration concessions terms, approval by the relevant regulatory authorities in Paraguay to the transfer of interests contemplated under the farm-out agreements is expected in the near future, with completion of the Paraguay farm-out following thereafter

- In relation to Atome, significant work is being progressed as is an intended spin off and separate flotation on the London Stock Exchange. Atome currently has no attributable value in the Group's balance sheet

- Subject to appropriate advice and approvals, President is contemplating declaring a dividend in specie of certain of its holdings in Atome at or around admission to the stock market.

Commenting on today's announcement, Peter Levine, Chairman said:

"The results for the first half of the year demonstrate an operationally profitable and solid business with very significant near-term potential.

Within the next six months, we look forward to the results of the three key value drivers mentioned below, each of which can have a materially beneficial impact on the Group.

"Preparation works for the commencement of drilling at the end of October of at least three wells in Salta Province, Argentina are underway.

"The conditions attaining to the long-awaited farm-out in Paraguay are well on their way to being satisfied with drilling of the large-scale oil prospect scheduled for H1 2022.

"Finally, work is progressing towards the spin-off and separate flotation of Atome, our hydrogen and ammonia production business later this year, subject to regulatory approval. Whilst no guarantee can be given as to both timing and suitability, on the assumption that the flotation does take place, then subject to court sanction of the cancellation of the share premium account of the Group recently approved by shareholders, the Company will have at its disposal adequate levels of distributable reserves from which to make a declaration of dividend in specie of certain of its Atome shares, should the Directors so determine.

"Accordingly, it's going to be a very busy next few months and we look forward to keeping shareholders appraised on material developments as and when they occur."

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